Legal And Ethical Behavior
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Legal And Ethical Behavior

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Legal And Ethical Behavior Legal And Ethical Behavior Presentation Transcript

  • Chapter 6 Legal and Ethical Behavior Retailing, 6 th Edition. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved.
  • Learning Objectives
    • Explain how legislation constrains a retailer’s pricing policies.
    • Differentiate between legal and illegal promotional activities.
    • Explain the retailer’s responsibilities regarding the products sold.
    • Discuss the impact of governmental regulation on a retailer’s behavior with other supply chain members.
  • Learning Objectives
    • Describe how various state and local laws, in addition to federal regulations, must also be considered in developing retail policies.
    • Explain how a retailer’s code of ethics will influence its behavior.
  • Ethical and Legal Constraints Influencing Retailers Exhibit 6.1
  • Primary U.S. Laws that Affect Retailing Exhibit 6.2
  • Primary U.S. Laws that Affect Retailing Exhibit 6.2
  • Examples of Laws Designed to Protect Consumers Exhibit 6.3
  • Pricing Constraints
    • Horizontal Price Fixing
    • Vertical Price Fixing
    • Price Discrimination
    • Deceptive Pricing
    • Predatory Pricing
    LO 1
  • Pricing Constraints
    • Horizontal Price Fixing:
    • Occurs when a group of competing retailers (or other channel members operating at a given level of distribution) establishes a fixed price at which to sell certain brands of products.
    LO 1
  • Pricing Constraints Exhibit 6.4 LO 1
  • Pricing Constraints
    • Vertical Price Fixing:
    • Occurs when a retailer collaborates with the manufacturer or wholesaler to resell an item at an agreed-on price.
    LO 1
  • Pricing Constraints
    • Price Discrimination:
    • Occurs when two retailers buy an identical amount of “like grade and quality” merchandise from the same supplier but pay different prices.
    LO 1
  • Price Discrimination
    • Cost justification defense.
    • Changing market defense.
    • Meeting competition in good faith defense.
    LO 1
  • Pricing Constraints
    • Deceptive Pricing:
    • Occurs when a misleading price is used to lure customers into the store; usually there are hidden charges or the item advertised may be unavailable.
    LO 1
  • Pricing Constraints
    • Predatory Pricing:
    • Exists when a retail chain charges different prices in different geographic areas to eliminate competition in selected geographic areas.
    LO 1
  • Promotion Constraints
    • Deceitful Diversion of Patronage
    • Deceptive Advertising
    • Deceptive Sales Practices
    LO 2
  • Promotion Constraints
    • Palming Off:
    • Occurs when a retailer represents that merchandise is made by a firm other than the true manufacturer.
    LO 2
  • Promotional Constraints Exhibit 6.5 LO 2
  • Deceptive Advertising
    • Deceptive Advertising:
    • Occurs when a retailer makes false or misleading advertising claims about the physical makeup of a product, the benefits to be gained by its use, or the appropriate uses for the product.
    LO 2
  • Deceptive Advertising
    • Bait-and-Switch Advertising:
    • Advertising promoting a product at an unrealistically low price to serve as “bait” and then trying to “switch” the customer to a higher-priced product.
    LO 2
  • Deceptive Sales Practices
    • Failing to be honest or omitting key facts in either ad of the sales presentation.
    • Using deceptive credit contracts.
    LO 2
  • Product Constraints
    • Product Safety
    • Product Liability
    • Warranties
    LO 3
  • Product Constraints Exhibit 6.6 LO 3
  • Product Constraints
    • Product Liability Laws:
    • Deal with the seller’s responsibility to market safe products. These laws invoke the “foreseeability” doctrine, which states that a seller of a product must attempt to foresee how a product may be misused and warn the consumer against hazards of misuse.
    LO 3
  • Product Constraints
    • Expressed Warranties:
    • Are either written or verbalized agreements about the performance of a product and can cover all attributes of the merchandise or only one attribute.
    LO 3
  • Product Constraints
    • Implied Warranty of Merchantability:
    • Is made by every retailer when the retailer sells goods and implies that the merchandise sold is fit for the ordinary purpose for which the such goods are typically used.
    LO 3
  • Product Constraints
    • Implied Warranty of Fitness:
    • Is a warranty that implies that the merchandise is fit for a particular purpose and arises when the customer relies on the retailer to assist or make the selection of goods to serve a particular purpose.
    LO 3
  • Supply Chain Constraints
    • Territorial Restrictions
    • Dual Distribution
    • Exclusive Dealing
    • Tying Agreements
    LO 4
  • Supply Chain Constraints
    • Territorial Restrictions:
    • Are attempts by the supplier, usually a manufacturer, to limit the geographic area in which a retailer may resell merchandise.
    LO 4
  • Channel Constraints Exhibit 6.7 LO 4
  • Supply Chain Constraints
    • Dual Distribution:
    • Occurs when a manufacturer sells to independent retailers and also through its own retail outlets.
    LO 4
  • Dual Distribution
    • Ralph Lauren has a dual distribution strategy where it markets its Polo brand apparel through its own retail stores as well as through traditional department stores.
    LO 4
  • Exclusive Dealing
    • One-Way Exclusive Dealing:
    • Occurs when the supplier agrees to give the retailer the exclusive right to merchandise the supplier’s product in a particular trade area.
    LO 4
  • Exclusive Dealing
    • Two-Way Exclusive Dealing:
    • Occurs when the supplier offers the retailer the exclusive distribution of a merchandise line or product in a particular trade if in return the retailer will agree to do something for the manufacturer such as heavily promote the supplier’s products or not handle competing brands.
    LO 4
  • Tying Agreements
    • Tying Agreement:
    • Exists when a seller with a strong product or service requires a buyer (the retailer) to purchase a weak product or service as a condition for buying a strong product or service.
    LO 4
  • Other Federal, State, and Local Laws
    • Zoning Laws
    • Taxing Laws
    • Franchise Laws
    • Blue Laws
    • Unfair Trade Laws
    • Building Safety Regulations
    LO 5
  • State, and Local Regulations Affecting Retailers Exhibit 6.8 LO 5
  • Ethics in Retailing
    • Ethical Behavior in Buying Merchandise
    • Ethical Behavior in Selling Merchandise
    • Ethical Behavior in Retailer-Employee Relationship
    LO 6
  • Ethics in Retailing
    • Ethics:
    • Is a set of rules for human moral behavior.
    LO 6
  • Ethics in Retailing
    • Explicit Code of Ethics:
    • Consists of a written policy that states what is ethical an unethical behavior.
    LO 6
  • Ethics in Retailing
    • Implicit Code of Ethics:
    • Is an unwritten but well understood set of rules or standards of moral responsibility.
    LO 6
  • Ethical Behavior in Buying Merchandise
    • Product Quality
    • Sourcing
    • Slotting Fees
    • Bribery
    LO 6
  • Ethical Behavior in Buying Merchandise
    • Slotting Fees (Slotting Allowances):
    • Are fees paid by a vendor for space or a slot on a retailer’s shelves, as well as having its UPC number given a slot in the retailer’s computer system.
    LO 6
  • Ethical Behavior in Buying Merchandise
    • Markdown Money:
    • Is what retailers charge to suppliers when merchandise does not sell at what the supplier intended.
    LO 6
  • Ethical Behavior in Selling Merchandise
    • Products Sold
    • Selling Practices
    LO 6
  • Ethical Behavior in Selling Merchandise
    • Home Depot’s no commission sales approach does not put the sales person at odds with the customer. However, given Home Depot’s self-service operation, paying a commission would be difficult.
    LO 6
  • Ethical Behavior in the Retailer-Employee Relationship
    • Misuse of Company Assets
    • Job Switching
    • Employee Theft
    LO 6
  • National Retail Federation Principles on Customer Data Privacy Exhibit 6.9 LO 6
  • Additional Slides
  • Price Discrimination Justifications Meet Competition in Good faith Changing Market Cost Justifications LO 1
  • Promotional Constraints Promotion Decisions Deceptive sales practices Deceitful diversion of patronage Deceptive advertising LO 2
  • Product Constraints Product Liability Product Warranties Product Safety Product Decisions LO 3